Domino's Pizza Announces Second Quarter 2006 Results

Diluted EPS includes the impact of reduced share counts and a tax benefit. International same store sales grew 5.7% during the quarter, marking the 50th consecutive quarter of international same store sales growth.

  Second Quarter Highlights:



  (dollars in millions,

   except per share data)                  Second           Second

                                           Quarter          Quarter

                                           of 2006          of 2005

  Revenues                                  $327.7           $347.0

  Net income                                 $24.5            $23.1

  Weighted average diluted shares       63,340,062       67,567,250

  Diluted earnings per share                 $0.39            $0.34

• Revenues were down 5.5% for the second quarter compared to the prior year period, due primarily to lower domestic distribution revenues. Distribution revenues decreased 9.7% because of lower food prices, primarily cheese, and lower volumes due to a decrease in domestic franchise same store sales. The average cheese block price per pound was $1.17 in the second quarter of 2006, down 22.5% from $1.51 in the second quarter of 2005. Revenues from international operations increased 6.3% on strong retail sales growth.

• Net income was up 6.0% for the second quarter compared to the prior year period, driven primarily by strong performance in our international business, lower cheese prices and a tax benefit of approximately $2.9 million recognized as a result of the sale of our Company-owned operations in France and the Netherlands. Net income was negatively pressured by a 4.9% decrease in domestic same store sales growth, increased interest expense and lower distribution volumes related to lower domestic same store sales.

• Diluted EPS was $0.39 for the second quarter, up 14.7% from the prior year period, driven by both an increase in net income and a reduction in diluted shares outstanding primarily due to the positive effect on share counts as a result of our $145.0 million share repurchase in the first quarter of 2006. Diluted EPS included a $0.05 per share benefit from the aforementioned tax item.

                  Domestic

                  Company-    Domestic      Total

                   owned      Franchise   Domestic   International

                  Stores       Stores      Stores       Stores       Total

  Store counts

   Store count at

    March 26,

    2006            580        4,506        5,086       3,038       8,124

   Openings           -           31           31          60          91

   Closings          (1)         (13)         (14)        (11)        (25)

   Transfers         (2)           2            -           -           -

   Store count at

    June 18,

    2006            577        4,526        5,103       3,087       8,190

   Second quarter

    net growth       (3)          20           17          49          66

   First two

    quarters

    net growth       (4)          15           11         100         111

   Trailing 4

    quarters net

    growth            8           66           74         238         312





                                                    Second         Second

                                                    Quarter        Quarter

                                                    of 2006        of 2005

  Same store sales growth (versus prior

   year period)

   Domestic Company-owned stores                     (3.2)%        + 8.6%

   Domestic franchise stores                         (5.2)%        + 6.6%

   Domestic stores                                   (4.9)%        + 6.9%

   International stores                             + 5.7%         + 7.8%



  Global retail sales growth (versus prior

   year period)

   Domestic stores                                   (3.9)%        + 9.1%

   International stores                            + 11.5%        + 23.4%

   Total                                            + 1.3%        + 13.5%

David A. Brandon, Domino's Chairman and Chief Executive Officer, said: "Our sales comparisons in the first half of 2006 were a significant challenge. We were lapping extraordinary prior-year sales performance while operating in a much weaker consumer-spending environment. We are not happy with our sales performance during the first half of this year and we are working hard to address this situation. However, it is valid to note that this rather lackluster sales environment demonstrates the resiliency of our business model. Despite difficulties in growing our top line during this timeframe, our bottom line continued to grow, and we continued to generate strong cash flows. This steady and reliable cash flow enables us to consistently deliver for our shareholders by utilizing a capital structure that appropriately leverages the Company; paying an industry-leading dividend; and making opportunistic share repurchases."

Brandon continued, "The ultimate test of any business model is how it performs in both good times and tough times. I am proud of our bottom-line performance during the first half of the year in the face of a difficult market environment and I have a great deal of confidence our franchisees and team members will work together to re-establish our sales momentum in the second half of the year."

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